Personal selling can be a powerful force for firms trying to sell their products.  According to the textbook, personal selling is a paid personal communication that is used to inform customers and persuade them to buy the firms product or products.  Personal selling allows marketers to focus specifically on the most promising sales prospects.  Personal selling is rising, as it allows for freedom for the sales consultant, can offer high income, and a high level of satisfaction to the person performing such tasks.  This type of selling is handy since most consumers seek information and advice about a product such as a computer before buying.  The sales consultant may recommend a particular firm that they are personal selling for and can succeed in selling that product to the customer.  These type of people are knowledgable about the product, have had personal experience with the product, and give the customer confidence in purchasing the product.  Personal selling is broken down into steps when approaching the customer.  It all begins with prospecting for a customer, pre-approach, approach, making a presentation, overcoming objectives, closing the sale, and following up the sale.  Some examples of personal selling are found in when the John Deere guy shows up at our house in the summer.  He approaches up in a kind, friendly fashion and will help us out for the day, free of charge.  Then he'll make a presentation on how a new John Deere implement would benefit our operation and goes over the great deals that are available to us.  This is all low pressure too, he mentions all these things in a suttle way and lets us think about it for a while.  Then if we do purchase a new swather, tractor, or baler, he offers excellent service and always comes out again to help after the sale.  This type of selling works real well, since we get a chance to get to know him and develop a trust, which in the end always works out great. 

As discussed in my previous blog, pricing can be a difficult thing for any firm to under go.  One such area of pricing mentioned was product-line pricing.  There are several ways for pricing within product-line pricing as described by the textbook.  Product-line refers to a group of closely related products offered by a company to target consumers that may have different needs, within the product line.  One way of product-line pricing includes captive pricing.  Captive pricing is when the very basic product in a particular product line is priced relatively low, then items that may be nessesary to make that basic product better may also be purchased at a higher price.  One great example given in the book is razors for shaving.  You can buy the handle and one or two heads for very cheap, but when you need replacement heads for the razor, they are more expensive.  The book also mentioned another example of gaming systems.  The gaming system itself, very basic, is relatively cheap, but adding more items to enhance the gaming experience can be expensive.  The controllers, games, audio, television set, memory cards, and the list goes on and on will cost more.  Another example of produt-line pricing involves premium pricing, which is described as having a product line with many versions of the same product.  The upper end of these products carry the higher price and on down the line to the basic products having the lower end cost.  This pricing method is commonly used when marketers want to capitalize on the gains that can be had with the higher end premium products.  Bait pricing is another type of product-line pricing.  This technique is when marketers put low prices on one item within the product line to seem attractive to customers, with intentions to get the customer to put the higher priced item in the product-line.  This example works when a retailer offers low prices on lower product-line items, but has the higher quality items available as well, hoping that the low prices get the customers to come, but eventually have the customer buying the higher quality item.  Price lining is the final example, where the price is staircased, and it keeps the demand curve in that staircase form.

How do firms come up with a price for their product?  Well according to the textbook, they look at several things when determining a price for their product thats not too high, yet high enough to turn a profit.  Establishing a price for a product can be broken down into stages, in which each stage is carefully examined.  First of which is to determine the pricing objectives.  Does the firm want to set prices that allow for survival, profit, return on investment, market share, cash flow, status quo, or product quality?  If a firm selects the survival objective, they are simply trying to set a price to increase sales volume to balance out the expenses.  When shooting for a profit objective, a firm is finding a price level and minimum cost levels that lead to maximum profits.  Return of investment objectives have a firm using trial and error since not all cost and revenue information is currently available to set a good price.  Another objective, the cash flow, is used when a firm wants to set prices that allow for quick sales, or suggest rapid sales of the product.  Status quo objectives occur when a firm is targeting a price level that stailizes the demand with the sales, so that everything is balanced.  The final pricing objective is the product quality which is based off of setting prices to balance the reseach and development and give the product a very high quality apperance.  The next stage in determining a price range is to look at target market's evaluation of price.  Depending on what the target market is, can determine whether the consumer is willing to pay the price for the product.  The third stage is to evaluate the competitor's prices (if any).  The firm should look at what the competition is charging for their goods, and decide what price best fits their product and how the compare in quality with the competition.  The fourth stage is to determin a selection of a basis for pricing, which in short how should the firm add to the price over the cost of producing the product.  A firm can use cost-plus pricing, by adding a percentage to the price after the cost to produce the product is determined.  They can go with a markup pricing, which is adding a predetermined percentage to the price of the product. Demand-based pricing, which is determining a price based on demand for the product, and then there is a competition-based pricing.  The competition-based pricing is when a firm decides to price a product based on the competition's price. Then in the fifth stage the firm selcts a pricing strategy, which is selecting a course of action to achieve the pricing and marketing objectives set by the firm.  Once all of these steps have been carefully thought out and considered, the final stage is reached, which is the selection of the price.  There is a lot of reseach and work that has to be put into determining a price, and mainly the firm has to know where they want to go with the product and have an idea of where they want to be in the future of their business.

There are all types of discounts offered to consumers for the products they purchase.  Examples of discounts fall into some sort of category, according to the textbook, which are trade, cash, quantity, seasonal, and allowance.   The first of which, the trade discount, is typically a percentage off of the listed price of the product.  Products purchased with a trade discount are discounted because the purchaser is taking care of transportation, selling, storing, final processing, and giving credit.  The other type of discount is a cash discount.  Discounts are given when the purchaser pays with cash.  A common example of this is paying for fuel with cash.  A lot of times you will see a gas price listed, but a discount of like ten cents is given if the fuel is paid for with cash.  Quantity discounts are another type of discount offered.  An example of this would be if the purchaser is purchasing a large quantity of the product, then the firm would offer a discount for the large quantity purchased.   Example of such occur when purchasing a large quantity of ropes, then usually the purchaser is given like a discount of a dollar off each rope, after so many are purchased as against paying full price for all of them.  Seasonal discounts are discounts offered when a product is being sold and it is out of season.  Example of this discount can be found the day after halloween, when all the halloween candy is cheaper than the day before halloween, since halloween is over the first of November.  The final example of a discount is the allowance discount.  This type of discount occurs when a buyer turns in an used item for a newer one.  One example of this discount could be found with the Best Buy's buyback program with electronics.  When you purchase an elecronic of some sort, you can turn it in when it gets old for a discount on a newer, more up to date elecronic of the same type of product.  These types of discounts can be found every where and help the consumer save money and can be used as promotional tools for the firms selling the products.

Determining the number of products to produce to begin to make a profit is known as the break-even point.  When a new product is being developed, firms start in the red.   The cost of research and development, promotion, and distribution make it tough to start out a new product, usually found during the introductory stage of a products life cycle (life cycle discussed in one of my previous blogs).  To begin making revenue, a firm must find out how many widgets (aka units of the product) to sell to see a return on their hard work.  This break-even point is found relatively easily, the break-even point equals the fixed costs divided by the price minus the variable costs.  (fixed and variable costs discussed in my previous blog as well)  To determine the amount of dollar sales needed to achieve the break-even point, you would simply mutiply the number of units needed to sell to achieve the break-even by the cost-per unit price to come up with a dollar figure.  Break-even point analysis is simple and very straightforward and easy to understand, but also important to firms to know.

Costs, costs, costs, how are they different, or are they different?  Well according to the textbook, there are several different costs associated with a firm.  One of which is known as the fixed cost to produce products.  Fixed costs are what they sound like, fixed.  These costs do not change according to how many products are being produced.  Some examples of fixed costs would be the costs of materials to produce the product, doesn't matter the number of products being produced, the cost of the material is always the same.  Another type of cost is the variable costs.  Variable costs, according to the book, are costs that fluctuate with relation to the number of products being produced.  An example of such would be when a firm is producing more products in a given day and running more shifts to do so, the cost rises with the increased production, but the material costs for more products would remain the same-fixed cost.  To determine the average fixed costs, one would be to divide the fixed costs by the number of units produced.  And to determine the average variable costs, you would take the variable costs divided by the number of units produced as well.  To determine the important cost, the total cost, you would simply add the variable cost to the fixed cost.

Advertising can come in all different styles.  We all get sick of advertisements, but how are they categorized?  What is advertising?  Advertising, according to the textbook, is a paid form communication to the targeted market to get them to purchase their product or buy into their idea/viewpoint.  One type of advertisement is called institutional advertising which promotes ideas, political viewpoints, and organizational images.  Advocacy advertising is another type of advertising, where the viewpoints of the firm and how they stand on the subject matter.  Product advertisement is just simply advertising the product and all the great things about it.  Pioneer advertising tries to invoke a need within the customers to purchase the product by displaying the benefits of the product.  This type hopes to create a demand for the product.  Competitive advertising can be interesting, since it tries to promote the benefits of their product versus "the other" product.  These advertisements will try to show how their product beats the competition in what ever area that they think will give them more customers.  Comparative advertisement compares the brand with one that is very well known.  Reminder advertising is simply putting an advertisement out there that lets the customer know that they still exist and reinforces all the benefits associated with their product.  Reinforcement advertising lets the customer know that they have made a wise decision in picking their product.  There are many types of advertisements, and I'm sure we've all seen these in some form or another on TV.  It's interesting to see how firm's decide which type will work best for them, or if they use a combination of a few.